NATIONAL
COMPETITION
COUNCIL
1 The National Third Party Access Regime
Access to Monopoly Infrastructure
in Australia
National Third Party Access Regime
(Competition and Consumer Act 2010, Part IIIA)
Part IIIA of the Competition and Consumer Act 2010 (Cth) (CCA)
establishes the National Third Party Access Regime for services provided
by significant monopoly infrastructure.
The Regime sets out several pathways by which third parties can gain a
legally enforceable right to access services provided by publicly and
privately owned facilities in order to enable them to compete (or
compete more effectively) in markets where competition is dependent
on such access, and access is not contrary to the public interest.
At different times various elements of the Regime has been applied to
services provided by facilities such as: rail tracks, airports, grain handling
facilities at ports, water and waste water reticulation pipes, port
terminals and natural gas pipelines.
This document provides a summary introduction to the National Third
Party Access Regime and in particular the role and responsibilities of the
National Competition Council (Council) in relation to declaration of
services which may then become subject to regulated access terms.
October 2011
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2 Why does the National Third Party Access Regime exist?
3 Three Alternative Approaches to Access
Commercial negotiation is the preferred means to determine the prices
and other terms and conditions of access to services provided by
infrastructure or other facilities. Where services are available in a
competitive market environment, access to those services can be
expected to be provided efficiently and at an appropriate competitive
price. In this situation, access regulation is generally unnecessary.
Access Undertakings - Providers of infrastructure services may
voluntarily submit access undertakings to the Australian Competition
and Consumer Commission (ACCC).
However, in some circumstances there may only be one facility that
provides necessary infrastructure services and it may be uneconomical
to duplicate such a facility. Where competition in related markets
depends on access to such services, competition in those markets is
likely to be significantly constrained with consequential losses in
efficiency and innovation.
The National Third Party Access Regime in Part IIIA of the CCA seeks to
ensure that nationally significant facilities that are uneconomical to
duplicate are shared on commercial terms and conditions where this
would materially promote competition and is not otherwise contrary to
the public interest. In so doing, this enables efficient access to
dependent markets by third parties, while maintaining both a facility
owner’s usage rights and providing an appropriate commercial return on
investment.
An undertaking may concern existing or proposed infrastructure and it
should set out the terms and conditions on which a provider will provide
access to relevant services.
Where an access undertaking is accepted by the ACCC, that undertaking
then provides for the terms and conditions of access and an application
for declaration under s 44F(1) of the CCA cannot be made.
Section 44ZZA(3) of the CCA sets out the criteria that the ACCC applies in
determining whether to accept an undertaking. Further information on
what is required in an access undertaking and a register of access
undertakings is available on the ACCC’s website (www.accc.gov.au).
Effective Access Regimes – State and Territory governments may also
create and implement access regimes for particular infrastructure
services within their jurisdiction. A State or Territory government can
apply to the Council to have such an access regime certified.
The National Third Party Access Regime provides for three approaches
to facilitate third party access to nationally significant monopoly
infrastructure.
Applications for certification are assessed against clauses 6(2)-6(4) of the
Competition Principles Agreement which set out the types of
infrastructure services that may be subject to an access regime and also
the broad requirements and framework for regulated access under the
National Third Party Access Regime.
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Once certified, a State or Territory access regime applies exclusively for
access to the designated service(s) and both the declaration and access
undertaking pathways are no longer available.
Declaration and Negotiation/Arbitration – A party may apply to the
Council to have the service(s) provided by a facility regulated. This is the
first step in a two stage process.
In stage 1, declaration, an application is made to the Council to consider
and make a recommendation to the decision making Minister on
whether the criteria for applying access regulation are met such that the
service(s) should be declared.
In stage 2, negotiation/arbitration, a service provider and access seeker
can negotiate terms and conditions of access to a declared service, and
failing agreement the ACCC can be called upon to arbitrate and make an
access determination.
4 Declaration and Access
The Council is responsible for considering applications for declaration
and recommending to a designated Minister (see Box 1) whether a
declaration should be made.
Box 1: Identifying the designated Minister
Applications for declaration / ineligibility decisions
For services that are provided by a
facility that is owned by a state or
territory body
Premier or Chief Minister
of the relevant state or
territory
All other services / facilities
Commonwealth Treasurer (or his
or her assistant Minister or
Parliamentary Secretary within
the Treasury portfolio)
Applications for certification
Application for certification of a state
or territory access regime
Commonwealth Treasurer
(or his or her assistant
Minister or Parliamentary
Secretary within the
Treasury portfolio)
The Council may only recommend to the designated Minister that a
service be declared where five declaration criteria (a-c, e, f) are satisfied
(see Box 2).
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Box 2: The declaration criteria – ss 44G(2) and 44H(4) of the CCA1
(a)
that access (or increased access) to the service would promote a
material increase in competition in at least one market (whether or
not in Australia), other than the market for the service (criterion
(a))
(b)
that it would be uneconomical for anyone to develop another
facility to provide the service (criterion (b))
(c)
that the facility is of national significance, having regard to:
(i)
the size of the facility; or
(ii)
the importance of the facility to constitutional trade or
commerce; or
(iii)
the importance of the facility to the national economy
(criterion (c))
(d)
[repealed]
(e)
that access to the service:
(i)
(ii)
(f)
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Similarly in making a decision in respect of the Council’s
recommendation, the Minister can only declare a service if the
declaration criteria are met.
A Minister’s decision to declare a service does not provide access
seekers with an automatic right to use a declared service or determine
the terms and conditions of any access/use. It does however, provide
third parties with an enforceable right requiring a service provider to
enter into access negotiations. Should commercial negotiation fail,
recourse may be had to the ACCC for arbitration of issues in dispute.
Council process and timing
The Council considers declaration applications through a transparent
public process. The Council usually has up to six months to make its
recommendation.
is not already the subject of regime in relation to which a
decision under section 44N that the regime is an effective
access regime is in force (including as a result of an
extension under section 44NB)
On receiving an application the Council will advise the owner of the
facility and other parties it considers may have an interest in the
application. The Council will also publish a public notice of the
application in The Australian newspaper and make the application
(excluding any confidential material) available on the Council’s website.
is the subject of a regime in relation to which a decision
under section 44N that the regime is an effective access
regime is in force (including as a result of an extension
under section 44NB), but the Council believes that since the
Commonwealth Minister’s decision was published, there
have been substantial modifications of the access regime or
of the relevant principles set out in the Competition
Principles Agreement (criterion (e))
The Council will seek submissions on the application as well as
undertaking its own inquiries and research. The Council will then publish
a draft recommendation setting out its initial conclusions. A further
opportunity will then be available for interested parties to provide
submissions on the draft recommendation. After these have been
considered the Council will provide its final recommendation to the
designated Minister (the Minister has 60 days from receipt
that access (or increased access) to the service would not be
contrary to the public interest (criterion (f))
Criterion (d) was repealed, effective 14 July 2010—Trade Practices Amendment
(Infrastructure Access) Act 2010 (Cth) (No. 102, 2010)
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of the Council’s recommendation to make his or her decision). The
Council’s recommendation will be published at the time a decision is
made.
Box 3: Summary of the declaration process
Declaration
application made
to the NCC
The process for considering an application for declaration is summarised
in Box 3.
NCC engages a
public consultation
process and
considers the
application against
the declaration
criteria
All declaration
criteria are
satisfied
Recommend to the
designated
Minister that
service(s) be
declared
One or more of the
declaration criteria
are not satisfied
Recommend to the
designated
Minister that
service(s) not be
declared
Submissions on
the application
Publish draft
recommendation
Submissions on
the draft
recommendation
Final
recommendation
to the designated
Minister
Designated
Minister considers
application against
the declaration
criteria
Service(s)
declared
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Service(s) not
declared
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Box 4: Section 44X – Matters that the ACCC must take into account
5 Determining the terms and conditions of access
Stage 2 of the National Third Party Access Regime adopts a
negotiate/arbitrate model. The commercial negotiation of the terms and
conditions of access is encouraged. It is expected that an access seeker
will seek to negotiate the terms and conditions of access directly with
the service provider.
Declaration does not necessarily lead to regulated access through the
application of an ACCC arbitration determination. Regulatory
intervention only occurs in the event that an access seeker and service
provider is unable to reach commercial agreement and an access dispute
is notified (by either party) to the ACCC.
Disputes about the contested terms of access can be arbitrated by the
ACCC. The ACCC has broad scope to make orders to resolve an access
dispute—although it must do so within the terms set out in Part IIIA
including, in particular, the factors or safeguards set out in s 44X of the
CCA in relation to the rights of service providers and existing users (see
Box 4). Furthermore the ACCC is required to apply pricing principles
(s 44ZZCA) which provide that access prices should:
be set so as to generate expected revenue that is at least
sufficient to meet the efficient costs of providing access
include a return on investment commensurate with the
regulatory and commercial risks involved
allow for multi part pricing and price discrimination when this
aids efficiency, but not where a vertically integrated access
provider seeks to favour its own operations
provide incentives to reduce costs and improve productivity.
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(aa)
the objects of Part IIIA (which include the efficient use of and investment in
infrastructure and promoting effective competition in dependent markets)
(a)
the legitimate business interests of the provider, and the provider’s
investment in the facility
(b)
the public interest, including the public interest in having competition in
markets
(c)
the interest of all persons who have rights to use the service
(d)
the direct costs of providing access to the service
(e)
the value to the provider of extensions (to a facility) whose cost is borne
by someone else
(ea)
the value to the provider of interconnections to the facility whose cost is
borne by someone else
(f)
the operational and technical requirements necessary for the safe and
reliable operation of the facility
(g)
the economically efficient operation of the facility
(h)
the pricing principles specified in s 44ZZCA.
The ACCC is specifically prohibited from making an access arbitration
determination that would prevent an existing user having sufficient
capacity to meet its reasonably anticipated requirements, and no
determination can result in a transfer of ownership of any part of a
facility.
Where extension or enhancement of a facility is needed to
accommodate access seeker(s), a service provider can be required to
undertake such expansion, but the costs of this are to be met by the
access seeker(s) along with interconnection costs.
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Providers of declared services to which an access seeker has rights under
an ACCC arbitration determination are subject to a prohibition against
preventing or hindering access to those services, but they are not
required to seek approval from a regulator in relation to their day to day
business decisions or their technology or investment choices, nor do
access seekers have a veto in relation to such matters.
Ultimately, if the ACCC is unable to arrive at access terms that
appropriately recognise the interests of an infrastructure owner, then it
does not have to require the provision of access to a declared service.
6 Other elements of the National Third Party Access Regime –
ineligibility for services provided by greenfields infrastructure
Part IIIA also provides for exemptions for services to be provided by
greenfields infrastructure. A person with a material interest in a
proposed new infrastructure facility can apply to the Council for a
service to be provided by that new facility to be ineligible for
declaration. For the proposed service to be ineligible, and for the Council
to recommend to the designated Minister that the service be found to
be ineligible, one or more of the declaration criteria (see Box 2) must not
be satisfied. An ineligibility decision will apply for a period of at least 20
years.
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Further information
The Council has prepared a suite of guides to its roles under both the
CCA and the National Gas Law. Also available are guidelines on various
matters, including making a submission to the Council and templates to
assist in making an application. Further information on these and other
relevant information can be found on the Council’s website –
www.ncc.gov.au.
The ACCC has a guide to the arbitration of access disputes under Part IIIA
which may be found at www.accc.gov.au.
8 Contact
National Competition Council
GPO Box 250
Melbourne VIC 3001
Ph:
(03) 9981 1600
Fax:
(03) 9981 1650
Email:
[email protected]
Website:
www.ncc.gov.au
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